E-commerce Fueling Industrial Real Estate Boom Bets

A?Chicago-based construction firm is placing their chips on the black of a steadily growing?e-commerce?boom and is looking to hit the jackpot with high net worth investors.

Quoting the?Boston Real Estate Times, “CRG, the real estate investment and development arm of Chicago-based Clayco?– one of the nation’s most prolific design-build construction firms – today announced the launch of?U.S. Logistics Fund II (USLF II), a fund that will develop a projected $1.5 billion of new state-of-the-art e-commerce and distribution facilities across key logistics markets throughout the United States over the next three years.

The new fund is open to high-net-worth individuals, family offices, wealth management advisers and other accredited investors, offering them the rare opportunity to invest in logistics properties – alongside institutional investors – during the strongest industrial real estate market in history.

In addition, CRG is setting a target of 10% investment from diverse investors. CRG will strategically target a pool of qualified investors that includes women and persons of color.?CRG President Shawn Clark?said he and the firm are fully committed to creating an inclusive process to facilitate improved access for traditionally underrepresented groups.

“We are bullish on the growth of e-commerce logistics and excited to expand access to these types of investments through USLF II,” said Clark. “We believe this fund is the first of its kind. It’s a natural step in our firm’s evolution and strengthens our position as the most vertically integrated development and building delivery firm in the country.”

The pandemic has fueled demand for industrial space and created new challenges for major retailers and warehouse users, including the need for modern logistics facilities to replace existing stock, which is quickly becoming obsolete due to requirements associated with today’s evolving supply chain strategies. In 2020, e-commerce sales in the United States grew by 32% or $598 billion of new online sales, according to the?U.S. Department of Commerce. According to a?CBRE?research study, each $1 billion in additional e-commerce sales requires 1.25 million square feet of distribution space to meet supply chain requirements.

The U.S. logistics market saw a net absorption of 223.6 million square feet in 2020 — with a record 116 million square feet of positive absorption in the fourth quarter — followed by 100 million square feet of absorption in the first quarter of 2021, bringing national vacancy rates down to 4.4 percent. This extended a record of 44 consecutive quarters of net positive absorption for the industrial sector. Rental rates for industrial buildings have risen 6.8% annually for the past five years, and asking rents increased 8.3% year-over-year at the end of 2020, according to CBRE.

Clayco, CRG’s integrated construction firm, is currently delivering more than $3.8 billion of new industrial projects for?Fortune 500?clients across 21 states and opened its first?West Coast regional office in Los Angeles?in May. CRG opened its first Southwest regional office in Phoenix in April to support the surge in industrial growth.

“Our tenants are demanding modern warehouses with taller clear heights for racking, more parking for workers, and more stalls for trailer storage as they adapt their supply chains to meet the demands of consumers shopping online,” said Clark. “CRG leverages our experience and integrated platform to deliver these assets turnkey for our clients. And USLF II will allow us to deliver meaningful solutions for our clients while creating value for our investors.”